The IPO Buzz: IPO History 101

Let’s take a look at recent IPO history. There is a startling parallel between 2009 and 2003, both in the stock market and the IPO market. Consider the following:

A Review of 2009

On March 9, 2009, the Nasdaq Composite Index closed at its year’s low at 1,268.64, DOWN 55.6 percent from 2,859.52, its previous closing high on Oct. 31, 2007 — 17 months earlier.

In the aftermath, the 2009 IPO market all but dried up. By June 30, 2009, just 14 deals had been priced.

Fast forward to Dec. 31, 2009, when the Nasdaq Composite Index closed at its year’s high at 2,269.16, UP 78.9 percent from its March 2009 closing low.

The 2009 IPO calendar produced a total of 62 new issues; 48 came in the year’s second half.

A Trip Back to 2003

On March 11, 2003, the Nasdaq Composite Index closed at its year’s low at 1,271.17, DOWN 38.3 percent from 2,059.38, its previous closing high on Dec. 30, 2001 — 15 months earlier.

In the aftermath, the 2003 IPO market all but dried up. By June 30, 2003, only 10 deals had been priced.

Fast forward to Dec. 31, 2003, when the Nasdaq Composite closed at its year’s high at 2,003.37, UP 57.6 percent from its March closing low.

The 2003 IPO calendar produced a total of 84 new issues; 74 came in the year’s second half.

Sound familiar?

Coming off 2003’s momentum, the Nasdaq Composite Index closed out 2004 at 2,175.44, UP 8.59 percent for the year. But the IPO market was off and running.

The 2004 calendar produced a total of 248 IPOs, UP from 84 the previous year.

Hope for an Encore

Now back to the present.

Here we sit the beginning of 2010. The Nasdaq Composite Index closed out 2009 at its year’s high and the IPOs market had staged a comeback.

Should history repeat itself, then the outlook for 2010’s IPO market is — shall we say — favorable.

And here’s another footnote from the IPO history book.

The recent decade, 2000 through 2009, produced 1,828 IPOs, according to the U.S. Securities and Exchange Commission filings, or an average of 183 IPOs per year. That yearly average was less than half of what the IPO calendar had produced over the last 30 years.

From 1980 through 2009, the calendar produced 11,339 IPOs, or an average of 378 IPOs per year.

If 2010’s IPO traffic can get back to anywhere near its 30-year average, then we will be in for busy times.

In closing, the late philosopher, George Santayana (1863-1952) wrote in his book, The Life of Reason (1905-1906): “Those who cannot remember the past are condemned to repeat it.”

Now wouldn’t that be a lovely thing for the 2010 IPO market?

Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations and opinions.

Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with IPOScoop.com. The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute changes due to market conditions, changes in a specific offering and other factors, such as changes in the proposed offering terms and the shifting of investor interest in the IPO. The information offered is taken from sources we believe to be reliable, but we cannot guarantee the accuracy.

Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.